Friday, Jan 28 2011
• 10 a.m. (ET)

News Roundup – Hour 1

President Obama takes his message of economic competitiveness to the Midwest. The federal budget deficit is predicted to reach a record high. And the first Guantanamo detainee tried as a civilian receives a life sentence. A panel of journalists joins Diane for analysis of the week’s top national news stories.

Guests

Chris Cillizza
author of The Fix, a Washington Post politics blog, and managing editor of PostPolitics.com.

Laura Meckler
White House correspondent, The Wall Street Journal.

Clarence Page
a syndicated columnist for the "Chicago Tribune."

Friday News Roundup Video

A caller who works at a community bank talks about the changes he has witnessed in how people handle credit and loans since the financial crisis began several years ago:

Transcript

10:06:54

MS. DIANE REHMThanks for joining us. I'm Diane Rehm. Following his State of Union address, President Obama traveled to Wisconsin to tout his economic recovery plans. The first Guantanamo detainee, tried as a civilian, received a life sentence. And as the debate over growing deficit heats up, the economy gained strength at the end of last year. Joining me in the studio to talk about the week's top domestic stories on the Friday News Roundup, Chris Cillizza of The Washington Post politics blog The Fix, Laura Meckler of The...

10:07:50

10:08:11

MR. CHRIS CILLIZZAHappy Friday.

10:08:12

PAGEYou, too.

10:08:12

MECKLERHi.

10:08:13

REHMAnd to you, Chris Cillizza, this newest financial report that was issued yesterday on the causes of the financial meltdown, there's one sentence in there that caused a great disagreement. It was, it could have been avoided.

10:08:35

CILLIZZARight. What's interesting about the report, Diane -- and this is from something called the Financial Crisis Inquiry Commission. This is a long 18 months of studying run by a guy named Phil Angelides, who's a former California state treasurer. He was a Democratic nominee for governor, unsuccessfully, in California as well. What's interesting about it is not the cause of it, which, I think, we all know and which is presented in this report, which is loans were being given to people by lenders, subprime loans, that -- to people who simply could not -- had no reasonable way of paying for the loans. As a result, at some point in the future, which we all know happened, these loans were defaulted on in droves, and we had the mortgage lending crisis.

10:09:21

CILLIZZAWhat is interesting, though, in what you note is, Phil Angelides, who is a Democrat, said this could have been avoided. Now, there were six Democrats, four Republicans on this panel. All six Democrats endorsed the findings and presumably endorsed Angelides' sentiment there. The four Republicans did not. And, in fact, Peter Wallison, who is, you know, a well-known sort of conservative who is on the panel, wrote a dissenting opinion, essentially saying he disagreed that it was -- that this was not a preventable problem. So the report is interesting in that the causes are surprising. But the fact that it is broken -- maybe this is surprising either, given the climate in Washington. But it's broken down along partisan lines.

10:10:05

REHMClarence Page.

10:10:06

PAGEWell, that's true. And it's also true that we knew that this could have been avoided in the sense that -- Alan Greenspan, talking about irrational exuberance back in the '90s. Numerous people talking every day about -- we got a housing bubble, don't we? Yeah, we do. Nobody did a thing about it. Everybody kind of unconsciously or subconsciously assumed growth will continue uninterrupted. Housing will only go up in value. It won't go down. We were all caught up in the irrational exuberance. And what Angelides has done is to pin it down, as others have in the past. The fact that it's fallen down along partisan lines is sad because it indicates the seeds of a possible repeat of this kind of a crisis in the future.

10:10:51

REHMYou know, it's interesting because they did sort of spread the blame all around. You had Alan Greenspan named. You had Ben Bernanke named. You had the current treasury secretary even in there as part of the fault. So I hope you're not right, Clarence, that history will repeat itself.

10:11:17

PAGEThe sad thing is when you got people pointing fingers in every direction, Diane -- you've been in this town long enough to know that the sad thing is that nobody takes responsibility. They just cast blame, and that's the kind of cycle we see happening here again.

10:11:28

REHMLaura...

10:11:28

CILLIZZAThen I think -- I was just going to...

10:11:29

REHMGo ahead.

10:11:29

CILLIZZA...say, Diane, just very quickly. I mean, I think that's the trouble with these commissions, you know, that are convened to study these things, is that you have one of two things happening. Either -- like the fiscal commission, which I know we'll get into, where, you know, politicians, it breaks down along partisan lines and politicians, whistle by the graveyard and don't talk about it. You know, or what's happened here -- which is essentially to Clarence's point -- you know, a back and forth blame game over something that, whether you are a Democrat or a Republican -- you would agree -- nearly brought this country's economy to its knees.

10:11:59

REHMLaura Meckler, I want to hear your reaction to the president's State of the Union address.

10:12:07

MECKLERIt's interesting. He came in to the State of the Union address much -- in a much stronger position than many thought that he would have been at this point, given the self-described shellacking he took in the election. You know, since then, he has done much better in the polls. He's given a very well-received speech in Tucson after the mass shootings there, a successful tax deal in December. So he came in strong, and what he seemed to -- the message he seemed to be giving was, you know, you guys want to cut government spending by, you know, very significant amounts.

10:12:35

MECKLERWell, I'm here to say that we're going to draw some lines in the sand. And where are we going to draw them? We're going to draw them around sort of American innovation, competitiveness, winning the future, this idea of sort of big think ideas about what the nation is about and where it's going. Now, whether he's going to get all the investments that he asked for, all this new spending on everything from wireless connections to roads and bridges and what have you, you know, I think that's a very open question.

10:13:00

MECKLERBut what he has done is set the lines to come for the budget battles that will happen later this year, where it would -- may be a matter of holding the line versus, you know, significant cuts. So I think that he came off pretty well in the State of the Union. Of course, there was comedy in the chamber that night. You had Democrats and Republicans, you know, all but holding hands, sitting next to each other with their, you know, ready-to-go dates. But, of course, as soon as it ended, you know, the e-mails started coming from Republicans -- even before it ended, frankly.

10:13:32

REHMThe Twitters were going even during the speech.

10:13:36

CILLIZZADuring the speech. That's -- I mean, that's -- I was just going to say to Laura's point, you know, it's -- I don't want to sound too cynical in that them sitting together is symbolism -- and this is the whole debate we got into in 2008, Barack Obama versus John McCain about, you know, John McCain saying, oh, Barack Obama is just words, and Barack Obama saying words matter. You know, go back and look through history, words matter. Does symbolism -- the symbolism of them sitting together -- matter more or less or about as much as the fact that -- to Laura's point -- halfway through the speech, you had 25 Republican reactions all condemning the president's speech.

10:14:10

CILLIZZAYou know, I -- it's -- I don't -- the one thing I would say, Diane, is I don't think it is wrong that the two parties disagree on things. There's a reason we have a two-party system in this country. They believe fundamentally different things about what the government should do and how we should solve the problems of the citizenry. Now, is there room for them to be more civil? Clearly, you can, you know, still disagree without being disagreeable. Clearly, there's room there.

10:14:34

CILLIZZAMaybe if this is a symbolic move in that direction, sure. But I will tell you when the camera panned around, one of the things -- I was watching it on television. I wasn't in the chamber. But one of the things that I found hilarious was some of these forced -- people who don't really have relationships -- and plenty of these people do have relationships across the aisle, but some of these people who don't, they just were sitting, staring directly forward.

10:14:54

REHMStraight ahead.

10:14:56

CILLIZZAIt seemed like a real forced pairing.

10:14:58

MECKLERNow, Chris Cillizza talked about a two-party system, Clarence, but there were actually two separate responses...

10:15:07

PAGERight.

10:15:08

REHM...from the GOP. Talk about that.

10:15:10

PAGEIndeed, there were. And, well, we had the regular Republican response from the congressman from Wisconsin. And if I just...

10:15:21

REHMPaul Ryan.

10:15:22

PAGEThank you. Paul Ryan. I had a little brain gap there. It happens a lot these days -- Paul Ryan. And then you had Michele Bachmann with the Tea Party response online. CNN carried it. But she insisted on staring at the Tea Party camera, not the CNN camera, so it looked somewhat off-target there. But what's significant here, though, is the Republicans are playing a role traditionally identified since the days of Will Rogers, at least with Democrats being a divided party that's constantly debating within itself. Now, the Republican Party is debating within itself. It did not look like a great moment for John Boehner as the Speaker of the House and the party's congressional leader to have such dissention happening and dual messages going out.

10:16:08

PAGEEssentially, Bachmann was not giving a message that explicitly was that different, but the language was different. She was talking more in a sense of crisis and that we're spending too much, and it was that Tea Party rhetoric that inflamed her voice. But, at the same time, the mainstream Republicans right now have a problem. They can't alienate their base, the Tea Party. At the same time, the regular establishment, they don't have that same kind of screen charisma or headline-grabbing talent. So it does give a sense of what disorder that's being transmitted to the public.

10:16:48

MECKLERAnd I think that what John Boehner is going to find is the same thing that Barack Obama found over the last two years, which is that when you're in charge, you have to deal with disparate opinions within your caucus, within your party. And he very much has that right in his face, and I think that what we saw on Tuesday night was very much a preview of what the challenge he has to come to manage, as Clarence said. And I think that at the same time, I think we saw a lot of previews, essentially, for the year to come on that night.

10:17:15

MECKLERYou know, with Obama up there trying to take the high ground and saying, let's all work together. Chris was talking about the symbolism of them sitting together. I think that what that says is sort of, okay, I've set a high mark, so if we end up bickering, it's your fault. I mean, and that's a little cynical to talk about how, you know, you look through the prism of high-mindedness and how they're looking for political advantage, but, obviously, there's some of that going on.

10:17:39

REHMAnd on the heels of President Obama's State of the Union address, you had the CBO offering a fairly dismal projection about the federal deficit, Chris.

10:17:55

CILLIZZAWell, fairly dismal is a kind way to put it. I think, Diane, you know, that the debt will grow -- what the CBO -- Congressional Budget Office is a non-partisan entity, though, you know, partisans certainly attack it when it is in their interest to attack it -- but, basically, said that the debt will grow to $1.5 trillion in 2011. It was about $1.4 trillion the last two years. And more daunting, I think, is that a projection that, by 2021, we could be $12 trillion. That's trillion with a T -- $12 trillion in debt. Just a staggering problem that the government must face and politicians do...

10:18:39

PAGEAnd yet the stock market boomed.

10:18:41

CILLIZZA...politicians do not want to face.

10:18:43

REHMChris Cillizza, he's author of The Fix. It's a Washington Post politics blog. Do join us. I look forward to speaking with you.

10:20:03

REHMAnd here's our first e-mail reacting to Michele Bachmann's -- what our reader, Diane, calls Michele Bachmann's revisionism of American history. Clarence, she goes on to say, "In her Photoshopped view of the founders, she completely distorts the history of slavery in our country. One might call her approach a disinformation campaign."

10:20:36

PAGEYeah, well, you know, she's referring there to comments that Michele Bachmann made in Iowa a few days before the national address, the Tea Party address. But she went on and on about how wonderful the founders were, even though, yes, there was slavery. They really worked tirelessly to end it and blah, blah, blah. It was a very revisionist view so far detached from reality that -- actually, a lot of people thought she was trying to revise history. I just got the impression she didn't know history and was overglamorizing the Adams -- John Adams and others who did criticize slavery.

10:21:16

PAGEBut even Benjamin Franklin had a couple of slaves. It's rather astounding, but it's similar to Haley Barbour here recently saying that he didn't recall segregation and all that being that bad. And, I mean, he's old enough. He's almost as old as me. I remember facing, you know, white and colored restroom signs. And, of course, you know, Goodman, Schwerner, Chaney were killed when Barbour was a young man. And yet he made it sound like it was gone.

10:21:46

REHMHe seems to have forgotten that.

10:21:48

PAGEAnd so people are wondering. Now, you've got two presidential hopefuls, if you will. Bachmann and Haley Barbour both been talked of as possibilities -- as are half the Republican Party, I think -- but, nevertheless, when you've got leading people like this giving that kind of view of history, it makes you wonder if it's not a modern version of the Southern Strategy that still causes so much debate and controversy from the days of Richard Nixon back in the '60s.

10:22:15

REHMLaura.

10:22:17

MECKLERWell, I think that Michele Bachmann just proves that she continues to be a problem for establishment Republicans who are definitely not wanting that to be the message that they're sending out. They're working very hard to talk about economics and jobs and the lack thereof and cutting government spending. And here you have these, you know -- I think it's fair to say -- diversions into discussing whether she knows the American -- basics of American history or not. So I think that's...

10:22:41

REHMBut, you know, I'd like to talk with her face to face. I'd like to...

10:22:46

MECKLERAre you going to invite her on the show?

10:22:47

REHMWell, indeed, we are planning to invite her on the show. I'd like to hear whether there is some revisionism going on or how she's formulating her ideas. Chris.

10:23:00

CILLIZZAWell, I don't -- it's probably too overly broad to lump her in with Sarah Palin -- two conservative women who are beloved by the Tea Party movement. But I would say there are similarities between the way in which the two of them approach media, which is they largely speak only either -- in Sarah Palin's case -- through Facebook, Twitter or her preferred mediums, more conservative talk shows and that sort of thing, and in Michele Bachmann's case, very similar.

10:23:34

CILLIZZAYou know, I think that is the deep-seated fear that the Republican establishment has. It's two-fold. One is that one of those two people become the nominee, I think, for -- in 2012, I think Sarah Palin is significantly more likely to be the nominee than Michele Bachmann, though I don't think she is likely to be the nominee, and, number two, that the Republican establishment cannot stop them from being the nominee. And that, to me, is a thing that we overlook. Everyone, I think, assumes, oh, well, if Sarah Palin looks like she's going to win, or Michele Bachmann looks -- the Republican establishment will step in, and they'll handle things. Like they handled Sharron Angle in Nevada, or like they handled Christine O'Donnell in Delaware, or like they handled Ken Buck in Colorado, or like they handled Joe Miller in Alaska?

10:24:16

CILLIZZAI mean, I can go on and on. My point is the Republican establishment proved in 2010 they do not have the capacity to stop these people. And in Christine O'Donnell's case, they may have actually strengthened her by attacking her in that Delaware Senate primary. So for people who dismiss Sarah Palin offhand, dismiss Michele Bachmann offhand, I say you are making a mistake. Look at what happened in the 2010 Senate primaries. That is not by accident.

10:24:42

MECKLERWell, it's interesting. This is not, by any means, a perfect analogy, but if you look at 2008, all the establishment was behind Hillary Clinton, and Barack Obama wound up with the nomination. So, you know, I think that Chris makes a good point. You know, party leaders do not choose who the nominee is going to be. Voters do. And, as he said, there is a very interesting history. I mean, having said that, it's still is hard to see how Sarah Palin ends up with the nomination, given the fact that you do have a broader base of voters in a Republican primary than you do in some of the Senate primaries that you have. But...

10:25:18

REHMWell, speaking of ballots and voting and who's on which base, you've got Rahm Emanuel in Chicago...

10:25:29

PAGEOh, yes.

10:25:30

REHM...back on the ballot, Clarence, and, as a syndicated columnist for the Chicago Tribune...

10:25:38

PAGEYes.

10:25:38

REHM...you must be overjoyed to see that.

10:25:42

PAGEI'm just overjoyed to see an interesting mayoral race in Chicago. It doesn't have anybody named Daley in it. This is only the second time in my lifetime this has occurred. I mean, six -- second time since, what, the late '40s that you've had a real mayoral contest without an incumbent so...

10:26:01

REHMBut he's got 20-point lead, doesn't he?

10:26:03

PAGEOh, yeah. He's...

10:26:04

REHMYeah.

10:26:04

PAGEIn the latest Tribune poll, he's coming close to being able to win this in the primary without a runoff. In other words, get one more...

10:26:12

REHMI see.

10:26:12

PAGE...than 50 percent. He's up in the 40s already, and he's working tirelessly right through this whole controversy in which he was off the ballot. He was still out there shaking hands all day.

10:26:22

10:26:31

PAGEUnanimously.

10:26:32

MECKLERUnanimously.

10:26:32

REHMI'm surprised that nobody is going to try to take it to the Supreme Court.

10:26:36

CILLIZZAWell, the issue there, Diane, is whether there is an actual legal issue that merits the U.S. Supreme Court looking at it as opposed to a debate over Chicago election law. You know, this is a debate. The root of the debate is, is Rahm Emanuel qualified via -- on the residency requirement that exists? Which is you have to be a resident of Chicago for the last year. Now, he has argued there's a clause in there. I was serving my government. It's usually reserved for military service, but I was serving my government. I was a chief of staff to the president of the United States.

10:27:08

REHMWas he paying taxes, too?

10:27:10

PAGEYes, yes.

10:27:10

CILLIZZAYes, he was.

10:27:12

PAGEStill has his driver's license.

10:27:12

REHMHe still has a residence?

10:27:14

PAGEStill had his house. Leased it out, but he still has his house.

10:27:16

MECKLERIt had his wife's wedding dress in the basement.

10:27:18

PAGEThat's right.

10:27:18

CILLIZZAThe issue was -- the issue that the people who challenged him on the ballot is he was renting -- taking rent money from a tenant living in his home. And they said, well, that clearly means you weren't a resident. He said it's about intention -- to Clarence's and Laura's point. My wife's wedding dress is there. I pay taxes there. My driver's license is there. I would add -- although Rahm didn't say this -- everyone who lives in this town knew that Rahm Emanuel wanted to get back to that town to run for some office and would make sure that he was eligible. I think that this -- the appellate court ruling took him and lots of other people by surprise.

10:27:55

PAGEYeah, it looks like...

10:27:55

MECKLERYeah.

10:27:56

PAGE...just that -- well, I was mystified because, normally, courts give great deference to the public's right to decide whether or not this person is qualified. So when the chips are down, they say, well, let the voters decide. In this case, the appellate court, two out of the three...

10:28:08

REHMTwo to one, yeah.

10:28:10

PAGEYeah, two -- by two to one, went to the dictionary definition, which normally doesn't carry that much weight in legal standing.

10:28:19

REHMInteresting.

10:28:19

PAGEAnd five of the Supreme Court justices signed an opinion that criticized the appellate court for the flimsiness of their reasoning. So that's another reason why I don't think it would ever go any further than this. 'Cause the Supreme Court usually gives deference to the state law anyway. You remember Florida in 2000 when this whole thing came up.

10:28:36

MECKLERWell, I think the interesting thing about this is that now, of course, Rahm Emanuel is favored to be the next mayor of Chicago and to see what that's like. I mean, he's an outsized personality. He's somebody who, for the last two years, has been, you know, ostensibly behind the scene, although very much a public presence in Washington, even though he was not the principal. But now he's going to be mayor, and he's going to be running a big city. He's going to be out there. He's going to be talking. He's going to be making decisions. And, I think, a lot of people are interested to see what that looks like and then, of course, what his future political career holds. I mean, I think a lot of people look ahead to see what -- is he a future governor, a future senator?

10:29:14

REHMI want to go now to defense spending because there seems to be kind of a split within the GOP about defense spending and, again, the question of how the party itself will relate to the Tea Party, Chris.

10:29:36

CILLIZZAExactly accurate. The Armed Services Committee met this week. Republicans, obviously, control the House now. Buck McKeon, who's a Republican from California, is the chairman. He ran into resistance, whether it was -- whether he expected or not from younger newly-elected members. People like Chris Gibson, who was elected in New York, a Tea Party-affiliated candidate who essentially said, I think we need to look at all areas of government spending, including Pentagon spending.

10:30:06

CILLIZZAYou know, you're talking about -- I wrote these numbers down because they were so amazingly large, Diane -- $550 billion budget for the Pentagon. That goes up to $700 billion if you include the spending on the wars in Afghanistan and Iraq. Given the problems we just talked about in the last segment at the CBO with, you know, $1.5 trillion in debt, the cuts have to come -- many of the Tea Party would argue -- from everywhere. Now, traditionally, Republicans have said...

10:30:35

REHMDon't touch.

10:30:35

CILLIZZAAll parties have said -- but Republicans, especially, have said -- you can cut a lot of things. You cannot cut defense spending because it endangers our troops. The question is, is it...

10:30:43

REHMAnd Secretary Gates is feeling very much that way, Laura.

10:30:48

MECKLERWell, yes. Although he has -- he's on board with cutting the Pentagon budget. He's recently proposed $78 billion dollars in cuts, and he is putting something on the table. Of course, he is not...

10:31:00

REHMSomething.

10:31:01

MECKLERYou know, he's not, you know, an enthusiast about cutting his budget, by any means. And, given his druthers, obviously, he would prefer more money rather than less. But, you know, this is very much going to be on the table. And I think that there is -- this just shows another -- as we were talking about before -- another internal tension within the Republican Party when their, you know, (unintelligible) right now. The reason why they're in Congress is to cut the federal budget, and, if you say, well, we're going to put military off the table, that makes it very difficult. What's left -- domestic discretionary spending is at 12 percent of the budget.

10:31:35

MECKLERSo then you're looking at entitlements, Social Security and Medicare. And, of course, they say those are on the table as well. But, once you get into that, talk about controversial. So, I mean, it's very difficult to just sort of take anything off the table.

10:31:47

REHMDefense Secretary Gates warned Congress that it's causing a "crisis on my doorstep." By failing to approve Pentagon spending, he argues, could hurt the military. Clarence.

10:32:04

PAGERight. But Secretary Gates has also pointed out there are some areas where they don't need something -- I believe it was $78 billion over the next five years of cuts.

10:32:15

REHMBut that $78 billion is pretty minor in view...

10:32:19

PAGEThe overall -- well...

10:32:20

REHM….in the overall picture, is it not?

10:32:21

PAGE...you know, then why is there a fight over it? Then why is there a fight over it? Diane, this is a very, very significant development, that you've got a voice within the Republican Party now, a strong voice, in favor of taking a good look at defense spending. Because it has only been with a unified front from the Republican side that we've had the bloated budgets that we've had. And when I say bloated, I mean, we are, I believe, over twice as well-armed as the rest of the world put together.

10:32:47

PAGEI mean, that's why the rest of the world turns to us all the time. I've asked past secretaries of defense, how many bases do we have overseas? They can't tell me offhand 'cause they can't remember all of them. You know, hard to keep, you know, track of it all. If I take a serious look at defense, then that means a lot of Tea Party folks are going to see that they've got a choice between Social Security, Medicare, Medicaid -- meaning, nursing homes -- and defense. I think some significant debates are going to break out of those.

10:33:16

REHMClarence Page, he's a syndicated columnist for The Chicago Tribune. And you're listening to "The Diane Rehm Show." Chris, you wanted to add something.

10:33:27

CILLIZZAI just wanted to point out that I do think that the most fascinating -- maybe it's just 'cause I'm a nerd about these things -- but the most fascinating element to me, of all these folks affiliated with the Tea Party getting elected in the 2010 election, is how will they govern? And how will they impact how Republicans govern? It is easy -- Barack Obama learned this lesson, quite --learned it the hard way over the last two years. But campaigning is one thing. Governing is something entirely different and entirely more difficult. On the campaign trail you can say, well, I'm going to do this, then I'm going to do that, and we'll cut this and we'll do this, and we'll get everything done and we'll balance the budget.

10:34:03

CILLIZZAYou get in there -- and even this military debate that we're talking about, cutting spending -- even people who are affiliated with the Tea Party movement, who happen to have a base in -- a military base in their community, get less zealous about cutting military spending when it impacts them. I always think of the BRAC, the base closures commission that goes through, when they try to get a certain number of bases that were going to close. Everyone is...

10:34:31

REHMAnd the debate…

10:34:31

CILLIZZAEveryone is in favor of the idea of slimming the (word?) until it is in your district.

10:34:37

REHMRight.

10:34:37

CILLIZZAThen it is the most important military base...

10:34:39

REHMThe NIMBY process.

10:34:40

CILLIZZA...the world has ever known.

10:34:41

REHMYeah.

10:34:42

CILLIZZAAnd that -- it's the devil is in the details in these things. And how the Tea Party movement takes its ideology and its beliefs -- which are strong and clearly backed up by lots of people in the American public -- how they meld it or don't meld it to the economic realities as it relates to the debt, whether it's, you know, the military, health care, tax cuts, to me, is a fascinating storyline to watch.

10:35:04

REHMOkay. The House voted to cut public financing of presidential campaigns. What I do not understand is the CBO's findings that the actions would save $617 million over 10 years. Can somebody explain how?

10:35:32

MECKLERWell, is this the piece of it that they're -- changed the option. And I'm not sure if this is what the CBO is referring to. But instead of having a voluntary contribution for a presidential campaign, it's a voluntary contribution to reduce the debt. So I'm not sure if that's what you're referring to in the CBO, but that was what the final House vote was, I believe.

10:35:51

PAGEWell, the sentence would come from not having to give money out to the candidates, right? I mean that's what we're talking about here. And, I mean, the fact is we do need to take a serious look at the campaign finance issue. Because, I think, President Obama, as a candidate, rendered it obsolete when -- at first, he sent signals verbally. Now, he will deny it, but he sent signals that indicated he was going to use public financing…

10:36:13

REHMRight. Right.

10:36:14

PAGE...until he found out he could raise a heck of a lot more money.

10:36:16

REHMWell...

10:36:17

CILLIZZAAnd, you know, Diane...

10:36:18

REHM...does all this mean that the next president is going to be elected by corporations?

10:36:26

CILLIZZAWell, the next president will be elected with -- outside of the public financing system. There is 100 percent chance -- Barack Obama was the first general election nominee to opt out of the public financing system to, you know -- except -- not 100. I think it was $80-something -- $70-something million in public financing since it was put in place post-Watergate. These are post-Watergate reforms to try and keep candidates from having to constantly churn and raise money.

10:36:54

REHMRight.

10:36:55

CILLIZZAThere is -- so he raised $750 million in 2008. And just a stunning total, $500 million of that was online. There is a zero -- if there was a number less than zero, I would say it. But there is a zero percent chance that Barack Obama will opt into public financing this time around because, as Clarence points out, he knows he can raise a heck of a lot more money not in it. As a result, the Republican nominee almost certainly will feel compelled to opt out of public financing in the general election.

10:37:20

PAGEAs John McCain did.

10:37:21

MECKLERWell, no...

10:37:21

CILLIZZABecause John McCain actually stayed within the system...

10:37:23

MECKLER...he stayed within. He got his...

10:37:24

PAGEMm hmm.

10:37:24

CILLIZZA...because he didn't know if he could raise money. But, I think, knowing what...

10:37:27

MECKLERAnd he was -- suffered the consequence.

10:37:30

CILLIZZARight. Knowing what we...

10:37:30

MECKLERHe was vastly outspent.

10:37:31

CILLIZZAKnowing what we know now, I just don't see other Republican can unilaterally disarm like that. And that means the end of the system.

10:37:38

10:40:04

REHMAnd our first e-mail from Annie in D.C. who says, "Your comments on the value of changed seating arrangements for the State of the Union sound so tinged with cynicism. The roots were in reaction to Tucson's violence. It's all right, often helpful, to start with small moves." Clarence.

10:40:29

PAGEYeah, Diane, I'm a little less pessimistic about it than Chris. And correct me if I misread you, but I think it had a positive impact. I was rather surprised. I went in cynical, but, you know, it kind of reminded me of on the playground if two boys are fighting, you know, you say, now, you two shake hands. You know, and I'll tell you, the act of shaking hands, having experienced it at age 7, does take a lot of the steam out of the anger. You know, you may still be mad, but at least a lot of the steam has gone down. And I think this -- I saw that happening, you know, even when Eric Cantor is going over Nancy Pelosi and asking, can I sit next to you?

10:41:06

PAGEAnd she says, oh, thank you for asking, but, you know, I've already agreed this really, you know, conservative Republican from Maryland, I'm going to sit with him, you know. I mean, also, you saw less of that competitive applause, which I was delighted to see that go. I think the whole event was shorter, for one thing, shorter in time, and it had more of a reasonable air of comity, which has been missing, I think, since, at least, the early '90s. As my buddy Mark Shields points out, you know, it used to be a day when you had Dan Rostenkowski and Bob Michael driving back to Illinois together -- you know, the leading Republican, leading Democrat -- and they'd sleep in a Holiday Inn or camp out, whatever. You know, you had that kind of comity going on. You don't see that now. And so maybe there was a bit of a turn toward the better here, which I know a lot of...

10:41:54

REHMLet's hope.

10:41:55

PAGEA lot to middle of the road voters out there were happy to see it.

10:41:57

10:42:05

VALERIEGood morning.

10:42:05

REHMHi.

10:42:07

VALERIEI think it might be a little bit too much to expect our Congress to have bipartisan civility when so many of them were so rude as to the texting during the President's State of the Union speech. I don't allow my college students to text during my lectures.

10:42:26

PAGEThank you.

10:42:27

VALERIEShame on them.

10:42:28

REHMI fully agree with you, Valerie. Laura.

10:42:32

MECKLERYou know, I always do find it a little disconcerting when you -- when the camera points to somebody in the audience, and you see, that or you see them reading along with the president. It is a little bit jarring, I have to say.

10:42:45

REHMA little bit jarring? It is downright rude. And, I think, at the next State of the Union, I think they ought to ban those things.

10:42:56

PAGEI agree.

10:42:57

REHMJust don't take them into the chamber.

10:43:00

CILLIZZAThat would be a fascinating thing, given that members of Congress, like reporters -- I will put myself in this category -- spend 98.8 percent of their days looking down at their BlackBerries.

10:43:11

REHMToo bad. Too bad.

10:43:11

PAGEI thought it was a prayer meeting. I was looking around that room, all these congressmen looking down in their laps. But, to me, it's like passing notes in class, you know. It's just -- you're right. It's really just disrespectful.

10:43:20

10:43:28

BOBGood morning. I am a proud community banker, and having this new report that came out got me to thinking about how we sourced our loans during the crisis and even before. We did 100 percent of our loans face-to-face with people that came to us, applied. We verified their income. We appraised the properties at arm's length. We did things right, yet 50 percent of our loans defaulted. And, of those 50 percent, nearly 50 percent -- another, you know, quarter of them, if you will -- were people who basically came to the bank and said, you know, my property is not worth what it used to be or when I bought it, and so now I want you, the bank, to share in the loss.

10:44:13

BOBAnd we were finding out that this was something that was being promoted by attorneys and by these mortgage clinics to go to a bank and tell them you take the loss because I'm uncomfortable with the value of my home. They still had the ability to pay. And as we saw this happening, I saw a mutation in how people view credit and how they react to credit. I don't think my grandfather would have done that. My father certainly wouldn't have done that. But I had so many instances of that, that, well, yes, the bigger problem where the loans were securitized and were put into the market place, the grassroots lending was not overenthusiastic, was not Pollyanna-like. We were doing things right.

10:44:58

REHMAnd, Bob, I would certainly agree with you that there were good many community bankers, like yourself, who did things right. I think that's why this financial report spread the blame.

10:45:15

CILLIZZAAnd, you know, Diane, I think that Bob makes a really good and important point, which is, I think, it is human nature to look at something that -- like what happened with the loan crisis and say, this one thing was the problem.

10:45:29

REHMRight.

10:45:29

CILLIZZAWe screwed it up. And next time, we won't do it. We won't ever have that problem again. As he points out, sometimes you can do everything right, and things still go bad. That's the more troubling and anxiety-provoking thing, I think, for your average person, which is sometimes you do it right, and it still goes wrong.

10:45:44

REHMAnd here's an e-mail with another point of view from Bob in Rochester who says, "Isn't the split on the conclusions of the study of the economic crisis totally expected? If Republicans agreed that the crisis was preventable, then more regulation would make sense. Regulation is not something Republicans want to embrace." Clarence.

10:46:14

PAGEBob is right. Bob is right. We do need more regulation. When you've got so many unsecuritized loans that were going out over the phone, just there were some horror stories of people getting loans based on their unemployment checks. I mean, that's just how irrational the exuberance got, Diane, and we all know it. This is not news. And the earlier caller was right, that the whole concept of borrowing, our own mental picture, broke down amidst what was called moral hazard.

10:46:48

PAGEThe moral hazard argument was what spawned the Tea Party movement a bit late. But that is what happens, though, when you tell people, well, you really don't have to pay off of your mortgage 'cause if the chips are down, you can go to the bank and cut a deal. That is, unfortunately, an idea that's gotten out there. It's not accurate, but then people get mad at the bank who won't make a deal, you know.

10:47:08

REHMExactly. Let's...

10:47:09

PAGESo everything has turned topsy-turvy.

10:47:10

REHMTo Lewes, Del. Good morning, Bill. You're on the air.

10:47:15

BILLYes, good morning. I was going to say nearly the same thing. And I will say that the -- you know, such an attitude that regulation is a problem is a very dangerous attitude when the ramifications are so great. And that's all I have to say on the...

10:47:33

REHMThanks for calling, Bill. And...

10:47:35

PAGEWell put.

10:47:36

CILLIZZAI would just -- I do think that this is a debate -- I was thinking back on this, Diane, because I was thinking of when Barack Obama gave the State of the Union address. So I was thinking, what are other State of the Union addresses that were memorable? And one that jumped to mind was the 1996 State of Union Bill Clinton gave, in which he declared very famously, "the era of big government is over." You know, I think we are still grappling with that statement more than, you know, almost 15 years on in that -- the question is, how much government do we need?

10:48:04

CILLIZZAI think the natural inclination -- your average person, will say, I want the government to leave me alone, and I can prosper, except in moments when I don't want the government to leave me alone. The economic crisis, Hurricane Katrina, these big events -- and that's the hard thing if you're a politician. People want government when they want it.

10:48:24

REHMAnd even more from John in Suffolk County, N.Y. Good morning to you.

10:48:32

JOHNYes, good morning. My question is this. We have a senator for -- an independent senator from Vermont. And he said just about yesterday that the Republicans that are in power now are thinking of cutting Social Security, Medicare, Medicaid -- stuff like that -- but he also said that we have a surplus in Medicare and Medicaid that will pay up to -- maybe for the next 25 years. So why would the Republicans want to cut something like that? I mean, it's political suicide.

10:49:08

REHMLaura.

10:49:09

MECKLERWell, the -- what's going on in those programs is, even though there is money in them, that the long-term projections were going to be -- certainly, in Social Security, for instance -- spending more than we're taking in. So we're -- that means that you're drawing on the money that's been saved in the so-called Social Security trust fund, but that trust fund is being used to fund the rest of the government day in and day out. So as you collect less money in taxes than you pay out in benefits, you have just sort of a basic math problem. So -- and that is a problem, whether you're a Republican or a Democrat. No matter how you want to deal with it, it is a long-term problem for the program.

10:49:42

REHMAnd, speaking of math problems, a number of our e-mailers have asked us about Justice Thomas and his financial disclosure forms, claiming his wife had no income. And, also, is there a conflict of interest that her earnings had on the Citizens United case, Clarence?

10:50:10

PAGEYes. Not just a math problem, but an English language problem or versus (word?), if you will. Justice Thomas said that he did not know that the financial disclosure form was supposed to include his wife's income, and so he filed a seven-page revision on it all.

10:50:25

REHMHow does the question read?

10:50:29

PAGEWell, I don't know, Diane. But I presume if it reads anything like the forms I've seen -- tax forms I've seen, I presume they want my spouse's income, too. But, in any case, that is for someone to pursue if they want to pursue it. Some folks are saying that Thomas should be charged with perjury or other kind of evasion.

10:50:51

REHMWell, has he broken a law that we know?

10:50:55

CILLIZZAWell, Diane, the pertinent law is the 1978 Ethics in Government Act, which essentially said that you have to -- if you are a Supreme Court justice -- you have to disclose your earnings and that of your spouse. Now, I think it is hard to prosecute him in that he has said that -- to Clarence's point -- I made a mistake. I misunderstood. I think that was his word. I misunderstood you.

10:51:19

REHMFor how many years?

10:51:20

CILLIZZAThirteen years. I misunderstood this. It was an oversight. The reason that we're talking about this is Common Cause -- which is a campaign finance reform group -- raised this last week and said, this seems odd. He's not reporting this. So, while he clearly was in the wrong, it seems hard for me to imagine that he will be prosecuted in any meaningful way because he can say, and has said, I misunderstood. I have amended it. Here is my -- here are my wife's earnings, you know, and let's move forward.

10:51:54

REHMHere's...

10:51:55

CILLIZZASome people won't be satisfied (unintelligible).

10:51:55

REHMOkay.

10:51:56

PAGEThere's also the conflict of interest issue (unintelligible).

10:51:57

REHMYeah, here's a quote from Stephen Gillers, professor at New York University School of Law. He said, "It was not a miscalculation. He simply omitted his wife's source of income for six years, which is a rather dramatic omission." He went on to say, "It could not have been an oversight."

10:52:28

MECKLEROf course, we don't know what is in his head. So do we know if it was a mistake? Or was it an intentional omission? You know, I don't think anybody is going to be able to say that. There are many public figures who have been caught in similar situations and worse. I mean, you look at our, you know, Treasury Secretary. Tim Geithner didn't even pay some of the taxes he owed. I mean, and -- you know, and he's the Treasury secretary. So I mean, that was much more significant, I think, than a disclosure form. And he paid the back taxes, and he was confirmed. So, I mean, I think that we should keep a little perspective here. It comes on both sides of the fence. But, you know, who knows whether he knew or not?

10:53:03

REHMLaura Meckler of The Wall Street Journal. You're listening to "The Diane Rehm Show." And your reactions as reporters to the choice of Jay Carney as the new press secretary to replace Robert Gibbs. Laura.

10:53:21

MECKLERJay, if you're listening, I think you're fantastic.

10:53:25

CILLIZZAMe, too, Jay.

10:53:27

PAGEDon't forget your old buddy, Clarence.

10:53:30

MECKLERAs a White House reporter, I'm -- I actually do like Jay Carney a lot. He's a nice guy. He's a former reporter. It's always interesting to see when reporters become spokespeople, go into the government. I think one really good thing is that they think he understands what reporters need to do their jobs. You know, Robert Gibbs is well-liked by a lot of White House reporters, but there's also some frustration that sometimes he's not accessible enough and doesn't -- isn't able to get people what they need in a timely way for their stories. Hopefully, Jay will understand those kinds of deadline pressures and be in a position to help us.

10:54:05

MECKLEROf course, on the flipside, he's not as close with Barack Obama -- nowhere near as Robert Gibbs is -- so he's not going to have that same kind of inside-the-room access.

10:54:13

REHMBecause Gibbs' relationship goes all the way back to the campaign.

10:54:17

PAGERight. In fact, further than that, from the beginning of Obama's senatorship.

10:54:21

REHMI see.

10:54:22

PAGEHe inherited Gibbs from Tom Daschle.

10:54:24

CILLIZZARight. And I think Laura's point is an important one. One of the strong suits of Robert Gibbs, in the eyes of reporters, was that you knew he knew what was going on. He was not just a random press person who they plucked out and said, okay, you stand up there, and here's the party line. He had a -- has a personal relationship with Barack Obama that, as Clarence points out, spans almost a decade at this point. I think -- the one thing I would say about Jay Carney as a colleague is that not -- is that's not a job that is an easy one, particularly following Gibbs and his access.

10:54:56

CILLIZZAIt's a high wire act. I think you have to try to be as open as you can with reporters while also pushing out the message of the day. It's a very difficult job, and I would say Jay Carney has never done anything like this before. He was -- prior -- he was obviously Times Washington bureau chief. He became Joe Biden's communications director after the election. That is not this job.

10:55:24

10:55:26

10:55:27

10:55:28

10:55:29

CILLIZZAThey say if you can make it with Diane Rehm, you can make it anywhere.

10:55:31

PAGEThere you go.

10:55:32

CILLIZZAI think that's a bumper sticker.

10:55:33

PAGEYou've launched another star.

10:55:34

REHMAll right. Well, that's true, in fact...

10:55:37

PAGEThere you go.

10:55:38

REHM...because Tony Snow...

10:55:40

PAGEYep.

10:55:40

REHM...started his career on this program.

10:55:43

PAGEThat's right.

10:55:44

REHMI want to take you to some less happy news, and that is the 25th anniversary of the Challenger disaster, which still feels very personal to me. It happened at 11:39 a.m. on that date of Jan. 28. I was on the air, and I did not get the news until about seven minutes before the hour. It was not an age when we had computers to inform us. And, I must say, I think I was talking with somebody about money at the time. And I was so stunned I just didn't know how to go on. You were only 10 years old at the time.

10:56:28

CILLIZZAI was going to say, Diane, I have a -- I still remember. I was 10. I was in fourth grade. And, normally, we wouldn't be tuning in to shuttle launches...

10:56:38

REHMRight.

10:56:39

CILLIZZA...because these were very common occurrences back in the '80s.

10:56:40

REHMRight.

10:56:41

CILLIZZABut I remember we were because Christa McAuliffe, first civilian...

10:56:45

REHMFirst teacher...

10:56:46

CILLIZZA...teacher in space. We had it on. I still remember it absolutely vividly. I think we all can remember that image way up in the sky, that terrible, terrible tragedy. I mean, I remember it like it was yesterday.

10:56:59

REHMAnd I think we all do.

10:57:00

PAGEIndeed.

10:57:02

10:57:10

ANNOUNCER"The Diane Rehm Show" is produced by Sandra Pinkard, Nancy Robertson, Susan Nabors, Denise Couture and Monique Nazareth. The engineer is Erin Stamper. Dorie Anisman answers the phones. Visit drshow.org for audio archives, transcripts, podcasts and CD sales. Call 202-885-1200 for more information. Our e-mail address is drshow@wamu.org. And we're on Facebook and Twitter. This program comes to you from American University in Washington. This is NPR.

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